Regardless if we understand it or not, our credit report has a considerable influence on our lives. It’s sort of like our health; we don’t treasure good health until we lose it. Lot of people don’t even realise they have a bad credit report until they apply for a line of credit and it’s rejected. It can come as quite a bombshell to some, considering that even one missed payment that is reported by your lender can remain on your credit report for up to seven years.
So, what is a credit report? A credit report is a report that stipulates details about your financial history with financial institutions. In recent years, credit reports have been remodelled to place greater attention on constructive history like paying your bills on time, but overwhelmingly, credit reports are used by creditors to examine your capability to repay debts by assessing your past behaviour.
When lenders check your credit report, you normally either get a pass or fail so any default irrespective of its severity can have a long-lasting effect on your financial opportunities for years to come. While finding solutions to improve a poor credit report can be tricky, there are specific things you can do to strengthen it. Luckily, we’ve put together a list of recommendations that you can try to improve your credit report and your general financial health.
Check your credit report for any mistakes
The first step is to inspect your credit report to discover exactly what it contains. You can do this by paying a small fee to a company like ‘Check My Credit File’ (https://www.mycreditfile.com.au). It’s not out of the ordinary for oversights to be made on credit reports which can have an unfavourable effect on your financial abilities. Read your credit report carefully and dispute any errors that you find to make sure your credit report accurately reflects your financial history. Some standard errors that can occur are:
- Mistakes in personal information
- Wrongful defaults and judgements
- Old defaults and judgements
- Incorrect information relating to your credit history
If you unveil any errors, notify the credit reporting agency in writing so these listings can be altered or removed to emulate your true credit history.
Pay your bills on time
A lot of people underestimate how important it is to pay your bills on time. Occasionally, individuals can be forgetful simply because they have too many bills to pay, so it’s a wise idea to talk to all your creditors and ask them to automatically debit your bank account every month. Usually, your creditors would be more than happy to do this as sending paper invoices is time-consuming and expensive. By putting all your bills on autopilot, you can be sure that they’ll be paid on time and in full, which will have a positive effect on your credit report
Add extra information to your credit report
There are certain details throughout your credit report which lenders will view positively. For instance, if you are married, have been employed by the same company for over two years, or you are a homeowner, then this information will boost your credit report. Lenders typically view this information in a positive light and it can assist in future credit applications. If you discover that this type of information is missing from your credit report, notify the credit reporting agency and ask that it be added.
Keep away from too many credit applications
Each time you apply for a line of credit, it is mentioned on your credit report. Clearly, excessive applications for credit will have a negative impact on your credit report and the way in which lenders view your financial behaviours. It is paramount that you are prudent and selective when requesting credit and only apply when you are confident it will be accepted. Additionally, if you recently had a credit application denied, wait a decent amount of time before applying again.
Consider a debt consolidation loan
Naturally, it can be very tough to oversee your debts when then you have lots of them. Forgetting just one debt repayment can become a default, which will remain on your credit report for at least five years. Consider a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Commonly, interest rates on debt consolidation loans are quite low, and you’ll eliminate any further defaults which will have a positive effect on your credit report. If you’re interested in a debt consolidation loan, get in touch with our friendly team at Bankruptcy Melbourne on 1300 879 867, or alternatively visit our website for additional information: www.bankruptcymelbourne.com